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09 Jul 2011, 18:35
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Company WXYZ manufactures and sells only four products: widgets, xylophones, yo-yos and zippers. For the past four years, the company has operated profitably. During that time, it has incurred thirty per cent of its costs manufacturing and distributing xylophones. During the same four years, sales of widgets, yo-yos and zippers have accounted for sixty per cent of the company's revenue.
Which of the following is most strongly supported by the paragraph above?
A. Zippers are more expensive to manufacture than xylophones.
B. Xylophones are the most profitable products produced by WXYZ.
C. Revenues from the sales of yo-yos exceed the costs of producing them.
D. The company's profit margin on xylophones exceeds twenty-five per cent.
E. The revenue of Company WXYZ has not increased in the last four years.
Which of the following is most strongly supported by the paragraph above?
A. Zippers are more expensive to manufacture than xylophones.
B. Xylophones are the most profitable products produced by WXYZ.
C. Revenues from the sales of yo-yos exceed the costs of producing them.
D. The company's profit margin on xylophones exceeds twenty-five per cent.
E. The revenue of Company WXYZ has not increased in the last four years.
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09 Jul 2011, 18:58
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D for me.
According to the argument, xylophones Cost Price = 30 % of total manufacturing cost.
xylophones revenue = 40 % of total revenues.
Nothing concrete is mentioned about any other product. Hence the choice should be the one that deals only with xylophones.
Crick
According to the argument, xylophones Cost Price = 30 % of total manufacturing cost.
xylophones revenue = 40 % of total revenues.
Nothing concrete is mentioned about any other product. Hence the choice should be the one that deals only with xylophones.
Crick
11 Aug 2011, 02:32
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what a question sirji !
+1 D
as crick mentioned, logically only D stands a chance to be the contender, and by POE too only D remains. Kudos to both of you.
I verified it mathematically and here it is:
Total Cost Incurred = X
Total Revenue = Y
Total Profit = Y - X
As given in question, the company has operated profitably,
=> Profit is positive
=> Y - X > 0
=> Y > X
=> 1 > X/Y
=> -1< -X/Y .... (1)
Now, we are also given,
Costs Incurred on Xylophone = 0.3X
Revenues from Xylophone = 0.4Y
Profit on Xylophone = Revenues - Costs Incurred = 0.4Y - 0.3X .... (2)
Profit margin = Profit/Revenue
=> Profit Margin for Xylophones = (0.4Y - 0.3X) / 0.4Y
= 1 - 0.75(X/Y)
Using (1), we have:
Profit margin on xylophones = 1 - 0.75(X/Y) > 1 - 0.75 = 0.25
=> Profit Margin is greater than 25%
+1 D
as crick mentioned, logically only D stands a chance to be the contender, and by POE too only D remains. Kudos to both of you.
I verified it mathematically and here it is:
Total Cost Incurred = X
Total Revenue = Y
Total Profit = Y - X
As given in question, the company has operated profitably,
=> Profit is positive
=> Y - X > 0
=> Y > X
=> 1 > X/Y
=> -1< -X/Y .... (1)
Now, we are also given,
Costs Incurred on Xylophone = 0.3X
Revenues from Xylophone = 0.4Y
Profit on Xylophone = Revenues - Costs Incurred = 0.4Y - 0.3X .... (2)
Profit margin = Profit/Revenue
=> Profit Margin for Xylophones = (0.4Y - 0.3X) / 0.4Y
= 1 - 0.75(X/Y)
Using (1), we have:
Profit margin on xylophones = 1 - 0.75(X/Y) > 1 - 0.75 = 0.25
=> Profit Margin is greater than 25%
